Scottish Power to raise prices by 8.6% from 6 December

Loft insulation is partly to blame for higher prices, says Neil Clitheroe of Scottish Power

Scottish Power has announced a price rise of 8.6% for dual-fuel energy bills from 6 December.

The company said it would increase gas prices by 8.5% and electricity prices by 9%.

The move comes amid political wrangling over the issue of energy bills, with the government planning to review the green levies that form part of a bill.

On Monday, Scottish Power was hit by an £8.5m penalty for misleading doorstep and telephone sales.

The price rise would lead to a £113 increase in the average annual dual-fuel bill to £1,424, Scottish Power said. It will affect about 2.2 million Scottish Power customers.

However, different areas of the country will face different price increases. For example, the rise will be 10.2% on average in southern England, but 7.3% in some areas of Scotland.

Reasons for rise

Scottish Power is the fourth of the six major energy suppliers to announce price rises.

SSE announced an 8.2% increase in domestic bills from 15 November, British Gas said prices for its customers would go up by 9.2% on 23 November, and Npower announced the biggest rise of 10.4% which will take effect from 1 December.

Graphic showing when the six major energy suppliers have changed their standard tarrifs and the size of the changes. Graphic shows that the suppliers tend to all make changes around the same time.

Scottish Power echoed the views of other suppliers by suggesting that the price rises were the result of the rising wholesale cost of energy. The cost of delivering energy to people's homes, and the rising cost of the government's environmental and social schemes were also to blame, it said.

Neil Clitheroe, chief executive of energy retail and generation for Scottish Power, said that there were a number of costs - such as windfarm payments - that did not exist 10 years ago, but which affected bills.

How to switch

  • Make a note of your current tariff
  • Find out your annual usage by looking on past bills. Your annual statement will also detail how much you spent on energy in pounds and kilowatt hours (kWh) the previous year
  • Decide on your method of payment - direct debit or online is generally cheaper than paying by cheque or through a repayment meter
  • Use an Ofgem-accredited switching website or talk to companies directly to find the best deal for you
  • If you choose to switch, your supply should not be interrupted
  • You will need to give an accurate meter reading
  • The supplier you are leaving and the new supplier should give you phone numbers to contact if there is a problem

"With an increase in costs for delivering compulsory schemes to reduce carbon emissions and improving energy efficiency in homes, we unfortunately have no other option than to pass these on by increasing our prices for customers," he said.

"We understand that these are difficult times for many families, and we have done what we can to hold our prices for as long as possible. Recently we announced a range of measures to help our most vulnerable customers this winter.

"We will now write to every customer who will be impacted by the price increase, and we would encourage anyone who is concerned to contact us so we can discuss their options."

Ann Robinson, of price comparison website Uswitch.com, which would benefit from people switching supplier, said: "Unfortunately, the floodgates have opened and it looks like consumers are going to be buffeted by suppliers in very quick succession."

Iberdrola, the Spanish parent group of Scottish Power, said that its UK operations had been affected by tight margins, as well as by energy efficiency and environmental measures imposed by the regulator.

"As a consequence, generation and supply is now loss-making, and leaves the company no option but to increase tariffs," it said.

Graphic on domestic gas bills and wholesale prices
Political challenge

There has been considerable political debate over the price rises.

Labour leader Ed Miliband has pledged a price freeze for 20 months if his party wins the next election and has been on the attack over the issue.

Subsequently, Prime Minister David Cameron said that there would be a review of the green levies charged to companies that are included in bills. He said this accounted for £113 on an average bill - the same amount as Scottish Power's subsequent price rise announcement.

The review will be followed by a competition test for the energy market to establish how it is functioning.

The Liberal Democrats called the idea a "panicky U-turn" by Mr Cameron, although Lib Dem leader Nick Clegg later said some of the environmental policies could be delivered in a more cost-effective way.

On Tuesday, former Conservative Prime Minister Sir John Major called for a windfall tax on excess profits made by the largest suppliers.

Penalty

On Tuesday, energy firm bosses will give evidence to a committee of MPs about the price rises.

Between August and December last year, the "big six" energy companies introduced price rises of between 6% and 10.8%.

Earlier this week, the regulator, Ofgem, said that Scottish Power customers were misled during sales approaches due to the firm's failure to "adequately train and monitor" staff.

The company apologised for the errors between 2009 and 2012, and has set up a £1m compensation fund for customers who believe they were victims of mis-selling.

It said it would also pay £7.5m to the 140,000 customers it has on the government-led "warm home discount scheme" aimed at supporting customers who are likely to be at risk of fuel poverty, as part of the penalty.

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